Ethereum [ETH] has been on a downward trajectory in recent weeks, breaching several crucial price points.
This decline has resulted in a more than 10% decrease in its valuation over the last month, with the digital asset currently exchanging hands at approximately $2,298, marking a 2% drop within the last seven days.
Despite this bearish movement, analytics company IntoTheBlock has shared insightful findings about Ethereum and the condition of its holders, potentially offering a more nuanced perspective on the current state of the asset.
Ethereum holders: 61% enjoying profits
In accordance with a recent study conducted by IntoTheBlock, 61% of Ethereum holders are still making gains despite the ongoing slump in the market.
The analytics firm highlighted that this statistic showcases a level of resilience among Ethereum holders, when juxtaposed with previous market cycles.
IntoTheBlock drew parallels with the prior year, pointing out that during the recent bearish phase, the percentage of profitable holders dipped to a minimum of 46%.
Following the 2017 market cycle, the percentage of addresses in profit dwindled to a mere 3%.
This data suggests that the current cycle indicates a stronger faith in the long-term value of Ethereum.
IntoTheBlock emphasized that this resilience signifies a heightened trust among holders, potentially indicating a more solid foundation for Ethereum even during market downturns.
Contrary to the period of 2019-2020, when profit-making addresses dropped below 10%, the existing scenario hints that any forthcoming downturn might be less severe.
On-chain information
To gain a deeper insight into Ethereum’s current market stance, it is imperative to assess some of its significant on-chain datasets. One such dataset is the estimated leverage ratio.
Based on CryptoQuant’s data, Ethereum’s estimated leverage ratio has demonstrated a noticeable uptick in recent months, currently standing at 0.355 at the time of reporting.
The estimated leverage ratio gauges the level of leverage utilized in the derivatives market by comparing the Open Interest to the total coins held on exchanges.
An escalating leverage ratio can signal increased speculative behavior, indicating that traders might be assuming more risks.
This trend could lead to elevated price volatility in either direction, as a surge in leveraged positions heightens the chances of liquidations, which could accentuate price fluctuations.
In addition to the leverage ratio, monitoring the influx of new Ethereum addresses offers valuable insights into network activity and potential market sentiments.
Information from Glassnode unveiled a decrease in the count of new addresses, which peaked above 126,000 on September 6th, only to sharply decline to approximately 79,000 new addresses subsequently.
A diminishing number of new addresses typically indicates reduced engagement or interest in the network, which could signify a pessimistic outlook.
A sluggish growth rate in new addresses may imply that fewer new investors are entering the market, potentially resulting in a reduction in buying pressure.
This decrease in network activity could contribute to the continuous downward pressure on Ethereum’s valuation, especially when combined with the escalating leverage ratio.